Hispanic Heritage Month:
Hernando de Soto
Name: Hernando de Soto
Born: June 3, 1941
Birthplace: Arequipa, Peru
Hernando de Soto is Peruvian economist known for his work on the informal economy and on the importance of business and property rights. De Soto was named as one of five leading Latin Americans innovators of the century by Time magazine in May 1999.
He was named among the 100 most influential people in the world in 2004 and de Soto is best known for his solution to problems of poverty in developing countries.
According to a 2002 Forbes article, de Soto says that 90 percent of the population in developing countries operates extralegally, that is, outside the formal economy. The opportunity for citizens to leverage their assets by a mortgage on a home or a loan on a business, are lost, which prevents the economy from expanding.
Also lost are tax revenues from the extralegal businesses. De Soto estimates that those assets, which he calls "dead capital," are today worth $9.3 trillion, according to Forbes.
Among his supporters is President Bill Clinton, who said, De Sotos ideas about how to empower the worlds poor represent one of the most significant economic insights of our time.
In a 2009 interview with PBS, de Soto discussed the impacts that the global crisis has had on the worlds poor.
The solution lies in property rights, he said. When you are selling cocoa futures, for example, nobody comes to market with the cocoa in their hand. They come with a piece of paper that says they have a claim to the cocoa in the future. All markets work on this basis of property rights.
You are selling title over something, you are not really selling it. And if you have a majority of the world that is still not titled in those assets that are in greatest demand, and with twice as much money out there, we are heading for one big storm.